sonali: welcome to ""bloomberg markets.",i'm sonali basak. the s&p 500 having the best week of the year. traders reading a sigh of relief from the latest inflation data. the s&p 500 is notching a gain. moving higher. really up, snapping weeks of declines. one of the worst weeks we have seen in a while. the nasdaq 100 up one .6%. the philadelphia semiconductor

index up a fair amount. 2.2%. what is interesting is how much green you see on the screen. even with negativity around intel. bitcoin lower about 1.6% into the weekend. looking across assets. the bond market is interesting. the two year yield fluctuating all day. around 498 on the day, it touched almost 5%. muted moves right now. a lot of volatility today. 10 year yield around 466. that hit around 4.70. you're still looking at three to four basis points. the u.s. dollar still on the rise. yen has been weakening drastically. looking at some movers on the equity side. tons of earnings have alphabet soaring past a $2 trillion valuation. after a first quarter revenue that beat expectations with artificial intelligence boosting growth in the cloud business.

analysts welcome the company's new dividend and additional $70 billion buyback. microsoft seeing its biggest jump after signs ai is fueling growth and demand. analysts were positive about strong commercial bookings and growth of its azure cloud unit. inflation showed little signs of letting up with core pce sliding -- rising slightly higher than admitted. and consumer confidence. how do we think about them going on at the same time? >> they might be more interested in consumer confidence numbers. they asked people what they think inflation will be. one year, expectations did rise to 3.1%. up from what it was last month. the five to 10 year was unchanged. there is still some relative confidence, but a little bit slipped as people look forward on inflation. looking backwards, the pce numbers, better than expected but worse than expected. in the sense that they came in

as expected, which was good news to a market worrying about what might happen after yesterday's quarterly number was higher than anticipated. it came as expected, .3% for the headline. incomes and spending were both up than anticipated. the bottom line is the economy is still strong and it does not look like inflation is going down. not really rising, but not going down. going to be on hold. sonali: i want to talk about the wall street journal report that donald trump's allies are drafting proposals that could erode the fed's independence, including a longshot policy the president should not play a role in setting interest rates here. what is the conversation around this? who would be in support of this, breaking with a long-standing tradition on something that

would frankly really overhaul the way we think about the economy and the fed's role in it? >> there are conservative republicans who probably would go along with it. outside of the trump campaign, not many others would think it is a good idea. this is based on anonymous sources prayed we don't know who they are. they did not even know whether donald trump was aware of this effort. obviously he had no love for jay powell when he was in office. it is plausible. but the idea the president should participate in any kind of monetary policymaking would really upset wall street. because then you bring in the idea of politics. you look at what happened in turkey, when erdogan decided where interest rates should go. it is probably a nonstarter. but as with just about anything donald trump, you cannot be sure. sonali: thank you for keeping an

eye on the possibilities on what is ahead. we will talk more about the inflation data. wells fargo's senior economist joins me now. if you look at what we got this morning, did anything make you think differently of how you think the bond market can progress from here? >> i think what we learned today is may be inflation in the first quarter was not quite as bad as feared, in terms of momentum picking up in march. we saw in terms of why the q1 numbers came in so much hotter yesterday. it was really more a function of january inflation being revised higher. there is good news, we did not see a big pickup and momentum towards the end of the quarter. when you step back, you see core pce at a 4% annualized rate over the past three months. that tells us inflation is going to be rather stubborn, in terms of coming down over the course of this year. sonali: how did you think about this with consumer confidence data? how problematic is it that

consumers are frustrated with the stickiness of inflation? even if they did not see a big boost ahead? the current level which we stand right now, how might that impact expectations and behavior? >> i think overall, the stubbornness of inflation is very much tied to the fact you've seen consumer confidence and sentiment really move sideways this year as consumers have not gotten as much relief on the inflation front as they were beginning to see last year. i think as we get into a later stage of this inflation fight, the realization for consumers is prices are not going to go back down to anywhere near what they saw in 2019, even just the pace of price growth still remains pretty hot. i think that is weighing on consumer confidence. at the same time, it doesn't seem to be deterring spending. >> when does it deter spending?

you see mixed data from the credit card and banking communities in terms of how much weakness there is in the consumer. the spending information has stayed strong. what would cause it to crack? >> when i'm looking at the path for consumer spending, it comes down to the outlook for real disposable income growth. particularly getting further away from all of the fiscal support we saw through covid that allowed consumers to spend, even as inflation was ranging and we saw disposable income. we are returning to the fundamentals which means the strength of the job market where goes from here. with expectations where the job markets are going to flow, we see a slowdown on disposable income because you're not seeing improvement on the inflation front. you see a taste of that looking at the year-over-year rate with disposable income. sinking to the lowest we saw

since 2022. we are seeing that more than consumers are feeling on the economy. sonali: a good time to set up for jobs data. what is the biggest place there could be the most variability? is it wages? this idea that it is not just the jobs you are seeing in the market, it is what people are making out of them. >> the thing that has helped real disposable income growth is the fact we are adding so many jobs. we will see another robust print next friday, probably around the order of 250 thousand. not as good as march, but very healthy. as you are seeing wage growth slow, that will be a limiting factor on how fast income growth can continue to rise. from there, we are expecting some further moderation in the trend and average hourly earnings. even if we get another 0.3% in

terms of month over month reading, it would bring it down to 4%. the slowest pace we have seen since mid-2021. you are seeing a downward pressure in terms of wages even as you see robust headcount hiring. sonali: what do you need to hear from the fed in light of their meeting? >> we will be listening for what the right path looks like. we are not going to get a summary of economic projections, but we will have to see jay powell, hawkish, given how sticky inflation has been in the first quarter. we could see that in terms of the statement. maybe they make some adjustments around their recent characterization of inflation. a lot of it is going to be have to tease out through the press conference through with the fed needs to see to regain what was

somebody confidence about the path of inflation ahead. sonali: wells fargo senior economist sarah house, thank you. it has been a busy week of economic data. another busy o coming up, we will talk about intel. it has been dropping on a lackluster outlook for the chipmaker. it is against the grain when it comes to tech stocks. it is our stock of the hour. we will talk about that next. ♪ to me, harlem is home. but home is also your body. i asked myself, why doesn't pilates exist in harlem? so i started my own studio. getting a brick and mortar in new york is not easy. chase ink has supported us from studio one to studio three. when you start small, you need some big help.

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i'm sonali basak. it is time for the stock of the hour. intel still struggling to return to the top tier of the chip industry. sales in the second quarter will be about $13 billion below analyst estimates. today is the biggest laggard in the s&p 500, and the only one in the fence -- philadelphia semiconductor index. earlier, pat kelce under spoke to bloomberg about the results, here's what he had to say. >> we delivered a solid q1, we met revenue, beat on earnings. put temp in in the first half. but we see a lot of improvement as we go through the year. with that, the foundry business, we are going to see progress on the foundry business. every quarter from now until the end of the decade. sonali: ed ludlow joins me now. it begs the question -- it raises the question, i get in

trouble for saying it that way -- why are there such standouts in terms of performance? ed: the story is a turnaround plan. the turnaround plan has been in process for a number of years. it is not yet showing fruition. that is really the question the street has. intel is interesting among chipmakers. it has products, largely cpus that go into personal computers. also cpus, gp used for data centers. at the same time, it wants to have a foundry business. in other words, a contract manufacturing business where it builds semiconductors for others, much like tsmc. the reality is if i took you around the world where intel has a facility and showed you what they are making, they are not making anything for third parties just yet. just for themselves. they are stuck in this moment where neither part of the business is where we promised it should be. sonali: if you see the stock

reaction, clearly intel's management has not portrayed its story to investors that could signal when the turnaround would be. what do investors need to hear from them at this point? ed: it is basically name dropping customers and showing evidence they show up in the financials. on the foundry side at least. you heard the sound bite from pat gelsinger. he said we will see progress every quarter through the end of the decade. on the product side, there are signs of progress. particularly in ai pce chips where they will exceed their guide of 14 million units. you thing about the story of our lifetime, ai accelerators, the reality is intel is telling us this year they will make around $500 million on their a.i. accelerator. amd, which came out with its latest generation mi 300, will do $3.5 billion this year. and nvidia has a $40 billion

topline market for its a.i. accelerator. the $500 million from intel shows how far they have to go to catch up in what is the most important market in the server and data center contacts right now. sonali: are they just too far behind on a.i. at the moment? ed: the difficulty is those two arms of the business. foundry and making foundry profitable is a really difficult exercise. it requires a lot of cost in the first instance. because they are not doing well on the product side, that is where they need to make money to pass over to the business. they talk about this $50 billion backlog of business. they have some names like microsoft that they will make chips for. it is a backlog because it is not yet real. these are technologies on the production side that come into force next year. and every quarter is a similar story. like many ceos, the message from pat gelsinger is trust me and

bear with me, it is coming. sonali: we will bear with you, we hope you're bearing with everyone else. that is ed ludlow. very busy week for that man. more tech earnings next week, as well. coming up on today's wall street beat. we go to the mining industry. elliott boosted stake in anglo american after they dropped a takeover bid. we will talk about that. this is bloomberg. ♪

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sonali basak this is "bloomberg markets." i'm sonali basak. it is time for the wall street beat. we're looking at blackstone. they have set a goal to grow total credit assets to $1 trillion in the next decade. to do so, they have made sweeping changes atop the unit. sandy berger had an exclusive sit down with the new head of

credit and insurance at blackstone. >> ultimately, what we do, we are always going to coexist with banks. we are great partners with them. we announced q1, a number of partnerships with barclays, keybank, win-win situations where what we brought to the table with highly complement three, solve the need for them. we will do more types of those partnerships. >> you are competing at the same time. >> there might be situations. for the most part, we borrow from them, pay them a lot of fees, we see opportunities and source risk for them at large. certain borrowers will come to us directly. that is what you will see. that is what i think ourselves and some of our competitors have gone through. we don't think this is a model where one needs to beat out the other. there is enough opportunity to finance, broadly defined the markets and coexist with one another in a very constructive way. >> the imf wrote a paper earlier this month, you will not be unfamiliar with their

hypothesis. the idea being private credit remains untested. untested in its current size. not necessarily it opposes a systematic risk, but to the individual investors who have invested and perhaps more risky but overleveraged and illiquid and nontransparent type assets. do they have a point? >> we have always seen slightly nuanced are different ways. lending in itself is not risky. you should have the right protections and do the low-level underwriting work. our performance ultimately speaks -- if you look at our default rates, we have seen zero defaults in our private credit portfolio over the last 12 months, in our noninvestment grade portfolio where we see an advance, we have seen less than 40 basis points. that is a fraction, 90% lower than in the public market. if you have the right expertise and position your book defensively, and that is what we have done -- you can persist. you may see some bifurcation of

performance. you have started to see a little bit earlier in q1. you have seen some slightly more elevated default performance in the lower middle market. where you invest ultimately matters. our focus has been we like to finance large companies that are better positioned to weather the cycle, advance them in cycles i have strong tailwinds, growth, high free cash flow generation. sectors like software, business services, the energy transition, renewable energy arena. if you do that well and stay away from things that may be more capital-intensive or cyclical in this part of the environment, you build a resilient portfolio. that is what we have done. sonali: that was geo dillard of blackstone with dani burger. we are going to talk about elliott. they have built a roughly $1 billion stake in anglo american.

people with knowledge of the matter have told bloomberg. it adds pressure on the british miner after it rejected a takeover from australia's bhp. we are going to talk about this with crystal. you also had broken the deal news as well along with our team . what is the latest? why does elliott have this position now? >> the elliott news came this morning that they have about $1 billion worth of stock in the company. it puts them in the top 10 shareholder. what exactly they are pushing for, especially in the context of the bhp approach is unclear. we are still doing more reporting on it. it is clear when an activist comes in, they believe the company will be undervalued. it would not be surprising if they think there needs more to be unlocked with anglo american. an interesting story. they are not the only investor that has showed up.

there are other investors who have spoken out. bluebell has also amassed a stake in anglo american. other investors are speaking out against this bhp deal. sonali: how do you think through anglo american bhp as it stands, giving you had followed this deal to the deal talks and reported outcome of that, and everything that happened since and the resistance against this deal, how do you explain what the state of play is? >> what is such a big deal, it was sitting at about $40 billion. there's always going to be multiple steps in negotiation. the bhp approach is an all stock approach. it had been rejected. it would be interesting to see whether this draws out other potential buyers. as well as with the pressure elliott and bluebell and some of the other existing shareholders are applying. it could push anglo american to

either figure out something strategically internally, or to entertain some other bids. it is a fluid situation. by far, i think people in the market are saying it is the beginning, not the end. sonali: explain some of these scenarios. how do you think about how the road ahead looks and whether this particular deal can come back on the table? >> what is required now from the bhp side is the ball is in their court. they either have to come up with a better price or negotiate the deal differently. it was an all stock offer. if they would come back with a cash offer or something slightly different -- but this whole deal is going to be a huge consolidation in the mining industry. the mining industry has a lot of other big players that have been gunning for assets. especially for copper. whether other works will come in, this is what we are watching. sonali: crystal tse, amazing work this week. it would have been the largest deal of the year.

now large investors hanging around the bend. we are looking at a week that you are ending s&p 500 back in the green, big tech saves the day. even with a selloff in the bond market. more markets coverage ahead. busy day. i'm sonali basak. that does it for today. this is bloomberg. ♪ when you automate sales tax with avalara, you don't have to worry about things like changing tax rates or filing returns. avalarahhh ahhh

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>> from the world of politics to the world of business. this is "balance of power." ♪